donative promises, bargain promises, and limits of contracts for social ordering

k = contract"The Principle of Fairness...holds that a person is under an obligation to do his part as specified by the rules of an institution whenever he has voluntarily accepted the benefits of the scheme or has taken advantage of the opportunities it offers to advance his interests, provided that this institution is just or fair....By making a promise one invokes a social practice and accepts the benefits that it makes possible....Thus promising is an act done with the public intention of deliberately incurring an obligation the existence of which in the circumstances will further one's ends."Harold's embarrassing story. two reasons not to tell: 1. gratuitously injuring 2. violating obligation to him that you have just incurred. Value of assurance itself, freedom of worry. Desire a principle of fidelity

1. A voluntarily leads B that A will do x (unless B consents to A's not doing x)2. A know that B wants to be assured of this.3. A acts with the aim of providing this assurance, and has good reason to believe that he or she has done so.4. B knows that A has the beliefs and intentions just described.5. A intends for B to know this, and knows that B does know it.6. B knows that A has this knowledge and intent; then, in the absence of some special justification. A must do x unless B consents to x's not being done.

B has "Right to Rely"; A must warn of intention to violate

Not a promise if done through coercion or deceit1. The Tort Idea: Pay for injuries done to another. As applied to promises, one ought to pay for losses which others suffer in reliance on his promises.

2. The Bargain Idea: That one who gets anything of value by promising to pay an agreed price for it ought to pay the seller the price he agreed.

3. The Promissory Idea: That promises are binding in their own nature and ought to be kept in all cases.

4. The Quasi-Contractual Idea: That one who receives anything of value from another ought to pay for it unless it came to him as a voluntary gift.

1 and 4 based on premise that justice is known after the event, and that the court corrects consequences of voluntary intercourse that turns out unjustly.

2 and 3 based that justice is known before transaction, and parties must settle justice beforehand.DONATIVE PROMISESP. 9: Dougherty v. Salt: 8-year-old promised 3K at or before aunt's death, Trial favor ∆, Appeal favor π, NYCA (1919) reverse for ∆. note was voluntary and unenforceable promise of an executionary gift. "Nothing is consideration that is not regarded as such by both parties." NO BARGAIN.Second Restatement, Contracts §§ 1, 17, 71, 79Consideration: broad and narrowcollective set of elements making promises enforceable, malleableconsideration = bargain

Restatement First and Second 2nd, § 71(1): "To constitute consideration, a performance or a return promise must be bargained for."2 distortions of bargain theory: 1. terminology:many elements other than bargain make promises legally enforceable, 2nd identifies these in "Contracts Enforceable Without Consideration."2. substantive:If consideration is whole set of elements that make promises legally enforceable, meaning will change to fit situation.Critique: Bargain theory suggests a closed system, where the law is stifled by non-bargain promises. Not consider reliance.Gifts: promised is non-enforceable, given is enforceable.Gifts!using deed or gift non-enforceable w/1. services, 2. not presently own, or 3. a future giftA Trust is an exception.Sometimes it's beneficial to give later, emotionally or financially or to spur anticipatory reliant action. Sometimes called beneficial relianceGratuitous =UnenforceableLon Fuller: 2 process grounds for enforcing promises, donative not fulfill either: 1. Evidentiary safeguards to ensure promise happened. 2. and Cautionary safeguards to prevent inconsiderate action by promisor.Conditional bargain promises vs. conditional donative promise (pg. 16-17)

If mow -> $20If you select car under 20K -> I will buy itview performance of condition as the PRICE of promiseview performance of condition as the MEANS to make gift, rather than the gift itself.Rich man to tramp: if you walk to store -> I will buy a coat. Walking is not a price, it is a means.P. 212: Hawkins v. McGeeDamages 2nd §344verbal promise to "make the hand a hundred percent perfect hand." ∆ say no contract. "Guarantee" is consideration. There are no "Magic Words" for consideration (promise, guarantee, etc.)If a machine, damages would be warranty value minus actual value. reliance vs. expectation damages(*)$500 to remedy-relianceamount to remedy hand-expectationmis-represented skill level.risk of surgery vs. reasonable expectationgiftgo to store for $2:exchangeIf taller person always wins, nobody enters into contract with tallest people. hurts taller peopleIf you know the rule, you can work around it.Big Question: Should the state intrude on a breached contract? Which ones?

Hypo:security deposit of 1 peppercorn to think about it? only if consideration is enforceable. OPTION

P. 28 Kirksey v. Kirkseyreciprocal inducement: a bargain.convention: a structure accepted to express it.1st Restatement, allow nominal consideration (§84: buy $5000 land for $1). 2nd reversed, say not consideration. Two exceptions: Options and Guarantees (Guarantor in a lease).P. 23 The SealUsed to "raise a presumption of consideration," a "natural formality". now it's empty. 2/3 states adopt statutes making unenforceable:

1. can't use seal as defense for consideration2. abolish distinction between sealed and unsealed.3. abolish use of seals completely.4. Limit effects of sealSome states, all written=considerationThel thinks this case is wrongMoral obligation≠considerationWhat about reliance?Relied upon promise of life in AL in order to make move to AL.Hypo:Dougherty boy buys skateboard in anticipation of receiving inheritance from aunt. expectation vs. reliance damages1st. vs. 2nd Restatementpromissory estoppel:(p. 32) 1st § 90: "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise."2nd: *The remedy granted for breach may be limited as justice requires.B relies on A to act to do X. If A not act, X enforceable because of reliance. Reliance is a legal basis for enforcing a promise. Get expectation damages (p. 30)more definitions (p. 33-34)Equitable Estoppel (Estoppel in pais): require a misstatement of fact and foreseeable reliance on the misstatement. If A states to B that X is fact, then B relies upon it; B sues A where X is relevant. A is estopped from introducing evidence that X is not true.Devecmon v. Shawboy relies on reimbursement of gift. called a bargain because the Europe trip was a "request".

When an act of reliance is in the initial writing, it is consideration!no consideration of skateboardp. 34 Feinberg v. Pfeifferp. 44 Reporter Williston: expectation damages should be used in all §90 cases. Buick hypotheticals. Addition in 2nd change this.promised pension w/o stipulation. Relies on pension (p. 37).Reliance is the act that the promisor knows (p. 38). she retires b/c of pension = promissory estoppel (p. 38).remedy is expectation damages.p. 39 Three Missouri theories for grounds for decisions:1. Theory of Act for Promise2. Theory of Promissory Estoppel3. Theory of bilateral contractp. 41 Hayes v. PlantationsNot meet requirements for establishing reliance under doctrine of promissory estoppel.vs.p. 42 define reliance and expectation damanges(*)p. 43 out-of-pocket costsand opportunity costs part of reliance damagesBuick contract on giving money, not the money itself.GoodmanHypo:Owen, I will love you forever. Promise? yes.Owen, David will love you forever, I promise. Promise? no.Expectation damages should cap reliance.Encouraged by ∆, incurred expenses. guaranteed profit if happened:given expectation in District Court, reliance in appeal. p. 47 Stout v. BacardiCan π (General) recover 550K through promissory estoppel?district court say no, S/J for ∆, appeal reverse and remand for trial.never discussed time length, but reliance proven. eventually only reliance damages actionable: out-of-pocket costs, moving costs.p. 52 Walters v. Marathonexpectation damages given:reasonably anticipate profitpart of reliance is foregoing some other endeavor (opportunity costs)Pappas v. Bever, Bissonnette"I intend" v. "I promise"1 Corbin on Contracts § 15 at 35 (1963): "A statement of intention is the mere expression of such a state of mind, put in such a form as neither to invite nor to justify action in reliance by another person. A promise is also the expression of a state of mind, but put in such a form as to invite reliance by another person."Not binding.Three situations in which a promise to discharge an unenforceable obligation is binding:1. promise to pay debt barred by statute of limitations.2. promise by an adult to pay debt incurred as a minor.3. promise to pay debt discharged in bankruptcy.p. 54 Exceptions:original is not void, but "voidable."When come of age, can "affirm" it.2nd Restatement: Contracts without Considerationp. 55 Mills v. Wyman25-yr-old rescued by Good Samaritan, π. Father promise pay expenses.Not rescued by request; voluntary relief. Not a minor, moral obligation not one of three exceptions. Affirm for ∆."It is only when the party making the promise gains something, or he to whom it is made loses something, that the law gives the promise validity." (p. 57).p. 59 Webb v. McGowin∆ promise to pay π for crippling injuries in saving ∆'s life. ∆ die.sufficient consideration with or without request of promisor because of material benefit received (saving life)life, body have monetary valueBenefit to the promisor or injury to the promisee is a sufficient legal consideration for the promisor's agreement to pay." (p. 62)Law of Unjust Enrichmentp. 64Obligation in the law of unjust enrichment generally is benefits-based.professional services do not claim restitution on principles of unjust enrichment.avoid transforming self-sacrifice into exchange of values.p. 65 Harrington v. Taylor

not entitled to consideration for saving life, even if promised. voluntarily performed, not such consideration.how are these two different?p. 66 Restatement, 2nd, Contracts §86Illustrations:1. Mills v. Wyman. Not binding.2. A lends to B, who dies. B's widow promises to pay. Not binding.6. A finds B's bull and cares for it. B's promise for compensation to A is binding.10. A digs well for tenant on B's land. tenant can't pay, B promises to pay A, binding.12. A does household stuff for B, without compensation, for years. B is rich, assures will pay A. B writes promise to pay 25K, binding.13. Same as 12. but oral promise and promise entire estate. A is entitled to reasonable value of services, not estate.p. 68 Past ConsiderationUnder law of restitutions, a remedy may be available even if no promise. sometimes because an obligation exists.THE BARGAIN PRINCIPLE AND ITS LIMITSCH. 1Section 1: set out bargain principleSection 2: limits of bargain principle by principle of unconscionabilitySection 3 and 4: doctrine of mutuality and the legal-duty rulep. 71 Hamer v. SidwayHypos:1. agree to not have sex until 25. Promise? yes.2. give $500 to never speed. Promise enforceable? no b/c speeding is illegal, and non-bargainable.3. "Give me money or I'll kill you." "Ok I'm going to bank." Promise? No, under duress,

distress = extortionLegal v. non-legal detriment:Though not drinking not a non-legal detriment, it is a legal one b/c limit freedomChange action as an inducement, may or may not have drank before agreement. Bargain? yes.p. 85 Desperate Traveler"'Consideration' means not so much that one party is profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first."Davies v. Martel (p. 74)MBA for promotionsimilar concept of legal vs. fact detriment.SalisburyE-mail saying "I will"

No difference of intent to Pappas, but difference of commitment. Must change behavior if reliance. π must prove saved liferestitution for Good Samaritan (donative promise) vs. paid professional (bargain)§90 if action is induced on reliance, §90 different from moral obligation. Thel disagrees with Eisenberg (author) about differences between bargain, reliance, and past consideration. Read his Yale Law Review article if you can find it.Hypo:Why doesn't Goldman Sachs trade and rent out chairs every day, just like Lincoln Center?cost>efficiency of chair stuffmarket carries cost of contractif cannot reduce cost -> internalize costs -> won't do itContracts are expensive. An efficient contract law reduces costs, mechanizes capitalism.p. 75 Hancock Bank V. Shell15 years entitled, can terminate in 90 days notice.mutuality is a form of considerationthis had mutuality, the agreement. it was not a bad bargain."My horse, my horse, my kingdom for a horse!" If give horse, binding contract? No.Money in TX, loan 500K drachma ($25), for 2K after war, plus 8% interest.

Trial say π gets $750, appeal say full $2KQuestion of Unconscionability"A plea of want of consideration amounts to a contention that the instrument never became a valid obligation in the first place..." (p. 79)Is it a good deal?Are there options?Why take this deal?What about loan sharks and price gougers?Duress means the promisee has done something wrong, not about other options, etc.Sometimes, expectation, reliance, and restitution damages are the same with bargains. p. 80 with the plumber.Hypo:p. 80 Municipal water supplier overselling water, there is a difference in expectation for municipal vs. individual sellers, selling say, Thel's unique Acura or a Babe Ruth baseball. Also, different when contract is only option.UNCONSCIONABILITYp. 83 Post v. Jones Desperate Traveler p. 85fairness and efficiency are the dual pillars of the bargain principle.monopolistp. 87 Williams v. Walker Furnituretitle not passed until everything paid, all tied together. unconscionable b/c hard to understand.idea of CONSENT doctrine. Further, it's a draconian remedy to prevent default. Excessive if remedy is to create punishment, not compensate promiseeThel thinks rent-to-own properties are a response to judicial striking down of cross-collateral, all-or-nothing consideration.Price gouging."Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party....In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power. The manner

in which the contract was entered is also relevant for this consideration." p. 89 (see also: footnote 7 on fraud)question of understandingStories about vacuum cleaner salesmen p. 94; no meaningful choice, manner of entry, unconscionable. Uniform Commercial Code: replace or contribute to common law?p. 97 Pittsley v. Housercarpeting contract. Does UCC apply? Predominant Factor test. Was installation (service) or carpet (good) predominant in sale? installation was supplemental, so UCC applies.Hypo:generator. give to:1. you to do contracts2. hedge fund for wine cellar3. hospital for kids (or pitbulls)willingness to pay, is most efficient, and best.buy Acura for 1300, find one for 1200. breach contract. remedy? Law not ask if the "price is right"T-Swift cancels b-day party. Do you get money back and she goes to jail? §364Uniform Consumer and Credit Code §5.108.b.c.Unconscionability, induceme with Unconsc. conduct.p. 102 Maxwell v. FidelityPrice gouging defined p. 99leverage and excess requiredSolar heater issues, total cost $15K including interest, $6512 for original.Procedural v. Substantive UnconscionabilityMaxwell, both "unfair surprise," fine print clauses, mistakes or ignorance of important facts or other things that mean bargaining did not proceed as it should. p. 106unjust or "one-sided" contract. can be sufficient in self to avoid term of contract. or can provide/confirm evidence of procedural unconsc. p. 106hypo:iPhone contract say every 6 months must forfeit all stuff to Apple. Procedural Unconsc. b/c contract nobody reads, cannot negotiate, and contract of adhesion (reasonable expectations)From Classic to ModernContracts Law(nominal consideration, objectively, is a bargain)Intent and situation don't matter (bargain only necessary for consideration)ClassicModernObjectiveSubjectiveStandardizationStaticDynamicBinaryMulti-facetedsmall doctrines (self-evident axioms) => larger, deduced doctrinesdoctrines justified with normative and policy/morality/experience(nominal consideration is does not fit the spirit of a bargain)IndividualizationThey do (not just bargain)bargain theoryreliance principle(modifications not allowed)(modifications allowed)(either no damages or expectation damages)(none, expectation, reliance, restitution, disgorgement)Mutuality vs. Illusory PromiseParadoxical, circular promise for promise. both parties must be bound or neither isp. 114 Scott v. Moragues Lumber Co.express condition: party to contract, though obliged, not under duty to perform unless and until something happens or doesn't happen; or if something doesn't happen, then no duty.contract conditioned upon will of both parties, void for want of consideration or mutuality of obligation.If I buy Bob, I'll charter it to you.hypos:What if it's the Jim, not the Bob, but the same boat? some Jurisdictions, yes. some no.If buy, what if, only charter if earthquake/rapture on Jan 5? no, no bargain.sell stock to you if Dow Jones at a certain level? yes.

Giving up legal right to look for others, therefore yes. if restriction -> consideration.Since one side is not bound, neither is bound to keep promises legally.Railroad and railroad tie company. if you make 50 ties, we'll buy them. enforceable? yes, commitment to sell to lumber mill, could have done something else (legal detriment).

Is it illusory? If gov't say so, they deprive good system of creating efficient contracts. 2-201 statute of frauds2.306 define output requirements, exclusive dealingsWood v. Lucy, Lady Duff-Gordon∆ gave exclusive right, π had duties: his promise to pay 1/2 profits. from exclusive agency and render accounts monthly was a promise to use reasonable effort to bring profits into existence. implied promise, like going to Starbucks and asking for coffee. consideration implied in terms of contract.Grouse v. Group Health Plan, Inc. at-will job, promised in bargain, not really mutuality. jurisdiction splitterminate before job start, reliance damages. courts are split on this; give moving costs and damages of lost job.Gray v. MartinoOfficer recover for $500. No consideration, it's his job. not a problem of bargain, problem of susceptibility to bribery. Don't worry about the motive, Talia might paint that portrait of Obama with or without the money.more hypos: Give note to jockey. if you win -> $100. Duty to give 110%. enforceable?leave note promising tip for server. enforceable?Why not for cops?Tip at Brooks Brothers for discount suit? enforceable?

Difference b/tw all: does the owner consent to the tips at the restaurant? does it interfere with relationship b/tw the owner and employer?Lingenfelder v. Wainwrightbeer building; extortion to keep goingJ contract to build Wainwright, but not get the contract for the refrigerators.So, J say no to build. Then Wainwright promise 5% to get him to keep working. Second deal enforceable? no bargain, prevents extortionTroubling bargainsExtortionviolate owner/employeebriberyduressFoakes v. Beerpay in installments sooner for no interest.part payment not consideration, cannot be consideration on a whole. UK, House of Lords. Think about stare decisis.p. 148 Legal Duty Rule:§73 Restatement 2ndperformance of preexisting legal duty is not consideration. second deal is unenforceableimproper pressure for second dealp. 149 Austin v. Loralhypo:promise 2K, not give 2K, not get it back. yes.was modification similar to a gift or extorted $200?refuse work until enter into modification, up $ for radars now and in all future contracts. sub- sue for $. contractor wants $ for extortion. because under duress, CoA give contractor $Williston on duress: must 1. show victim of unlawful or wrongful act or threat 2. such act or threat must deprive victim of unfettered will p. 152duress seen as fear of breach, yet "a threat to break a contract does not in itself constitute duress." (151-2).necessary to prove if sued sub-, all damages suffered to gov. to reputation.sub liable for expectation damagesTHE LIMITS OF CONTRACTLegal-Duty Rule"if he is satisfied" or "if he pleases" or "bargain for a chance to" are all illusory promisessame as "hunting license"if quantity is completely dependent on will of buyer, void.Performance of legal duty is excluded from bargain principle.Mom's deal to give money for not smoking weed is not up for consideration.NYCA reverse! that threat to breach is duress, that they lost free will. p 155stay tuned for chico v. schweitzer later in the semesterwant to know how to screw people over? Write a check for only part of however much you owe them, on the back write "payment in full" then have them sign. then your debt is fully paid.must be in a regime under which modifications are enforceable. enforceability regime p 158Restatement First §406A contracts to build house for B, at $25K. A realizes partway it's a losing deal, wants to quit, B accepts and doesn't pay. That's sufficient consideration.Restatement Second §73legal duty not consideration often applied to cases where duty owed to third person.An accord is a modified contract (performing Q instead of P, p. 170), an executory accord is one agreed to, but unperformed. 2nd §279, 281. not consideration under classic contract law. substitution, however, is complete replacement of contract. Their difference vaguely is of intent, usually a substitution does not originally involve money. sub: initial contract is void. accord: initial contract is active until fully executed.Restatement 2nd §89 Angel v. MurrayLegal Duty RuleHold-up GameThe modern trend is 2nd §89:promise modifying original contract made before contract fully performed on either side is binding if unanticipated change, fair, and reliance remains equal.Footnote 3, p 176. w/ §89, not enforceablefootnote 2, enforceable with §89Should ∆ have anticipated price change? not to degree it did. favor ∆.Clark v. Westpay $2/page; if not drink, $6NYCA reverse for ∆∆ drank. ∆ said there was a "express waiver" of drinking stipulation.must relinquish something, waiver is a way to get around "preexisting duty" issue. if waived, conditions of express waiver apply.drank in Equitable Estoppel? if incidental to contract, waiver has consideration. if subject of waiver is the thing granting consideration, waiver not enforceable. Drinking was incidental, pages were still written.question: what damages here? expectation? $6?hypo: you paint, give $10Kwaive painting, should you get the $10K? no.2nd Restatement §84Illustrations 3, 4, 6p. 1863. A overrule architect C in saying B deserves compensation for building house w/ minor defect. A's promise is enforceable.4. in reporting fire damages w/in 30 days, insurance A tells victim B oral communication is ok. A cannot go back and say written is needed.6. A can go back and ask for written if there's enough time to do so.ch. 1 (9-69)ch. 2 (71-187)ch. 3 (189-207)Mention selling organs: some things are not alienable (is this in the US Constitutional context of "inalienable" or the Marxist context of "alienation" or both?)

sell kidneys? no. sell eggs? hmmm...Hawkins v. McGee Revisitedexpectation: promised v. where it isreliance: hairy v. scarredrestitution: fee back, if there was a feeBalfour v. Balfour"It is necessary to remember that there are agreements between parties which do not result in contracts within the meaning of that term in our law." p. 189 therefore, should not have legal consequences.An Introduction to Contract DamagesRestatement, 2nd §344 protect promisee interestsDougherty v. SaltIf you make the hand worsehere, expectation doesn't matter, reliance does.promise now to buy wheat on 12/1KP = $100 nowexpectation = 150restitution = 100reliance = 100MPKD = 150MPPD (12/1) = 150If...MPKD 100KP 100Exp 150Rest 100Reliance 150This is a gift, K, for $50,this wouldn't happen IRLIf no K, -100, 12/1 wheat $150reliance and expectation is $150if market price = K price, expect. = relianceDon't enter into another contract have to give lost opportunity. reliance = expectation. amount given protects reliance and expectation. protect foregone opportuntiyto protect reliance interest, give expectation damages. in market, all K @ market price, even in relianceDamages in a Competitive MarketSullivan v. O'ConnorGive reliance damages for botched nose jobKuller and Purdue, The Reliance Interest in Contract Damages 46 Yale LJ 52 373US Naval v. CharterTo get more profits, maximize profits to author. You get more books, author is incentivized to make more books, maximum profits.

Uber take a car from a friend on vacation w/o permission to make $200, put on $30 depreciation. how much?break into house and rent for $100K. how much for damages?

expect to buy $45 mill., sell to somebody else for $48mill. expectation is $3mill., value of the disgorged violation of the contract.

Build a house with ABC in K, mistakenly use XYZ. The same but different brand. $45 mill. notice. $100K to tear and replace.1st: copyright enfringement, $700K all profits from violated property right.disgorgment ruled. but on appeal, goes to contract damages, 33K of lost hardback revenuesexpectation damages are easier to establish than reliance. Expectation also takes into account externalitiesbreak promise to sell, all get are losses? losses here are 0.definenew cost will increase value of house. w/ $100K>expectationmore than expectation raises the pricealways going to agree to expectation, promisor wants to commit to it, nobody expects promisee to want more than expectation.yet in Naval, promisor wants to promise disgorgement: saves money on rights to publish. it's hard in Naval to get expectation damages correct. Disgorgment establishes more trust, and is more efficient.ch. 4 (211-244)Orange Crush v. Miami Coca-Cola: because there no buying minimum, no restriction.vs. Illusory promiseWaiver, Part of Accordscontract of intent, modification is binding, waiver is not.Restatement 3rd, Restitution and Unjust Enrichment §39If deliberate breach = disgorgment, and damages not expectation, promisee has claim to profit.Opportunistic BreachEfficient Breachefficient breach = desirable if promisor's gain from breach, after paying expectation, will exceed promisee's loss from breach.Richard Posner: "Economic Analysis of Law"Overbidder Paradigm: breach to sell to higher bidderResale Paradigm: widget example on p. 238. with new sale, increase social value, promisor's profit, reimburse original promisee, help new promisee.Predicates: 1. promisee indifferent to damages or performance;2. promisee knows value of deal to promisorCriticism of efficient breach:

Judge use reasonable discretion "in good faith" to determine PPanhandle v. Becker p. 279Buyer can choose cover or hypo-cover in good faithShirley MacLaine v. 20th Centuryp. 305Not obligation to mitigate because "Big Country, Big Man" is different and inferior to "Bloomer Girl," even if same money. S/J for π affirmedMadsen v. Murray p. 301pool tables, had obligation to mitigate wood, not just make into scrapwood, b/c not "commercially reasonable."Pt. 4 ForeseeabilityHADLEY V. BAXENDALEP. 313crank shaft replacement. lose money waiting. rule: lost profit was

not "natural," or warned, or in contemplation, or "not too remote.""The debtor is only liable for the damages foreseen." p. 314Victoria Laundry v. Newman Indus.lost profits granted because boilers were foreseeable as making profit.Koufos v. C. Czarnikow, LTD.change in sugar price foreseeable, rule for π for lost profits from lowered price. recover difference in revenueHypo: DJ wedding $600K, if not there tomorrow, lose $. FedEx planecrash. FedEx pay $600K? raise price courier. Hadley rule: up value, must disclose info (must tell at K time, not performance time), few want to opt out of K, drives down price of K. type of loss diff from amountPt. 5 CERTAINTYKenford v. Erie p. 328∆ to build dome, agreement never made. rule: expectation is unreasonably determined, no proof. not in contemplation, given reliance.Thel says this is absurd, horrible consequences for investors and risk takersPerna Research: π 3 elements: breach direct and proximate caused lost profit, profits contemplated by both parties, rational basis to figure lost profits.hypo: give $10 to buy $2 for lotto, breach, win! calculate damage for likelihood of winning, not jackpot itself.Pt. 7 Liquidated Damagesliquid damage clause cannot punish."The purpose of a stipulated damages clause is not to compel the promisor to perform, but to compensate the promisee for non-performance." p355p. 349 Wasserman's, Inc. v. MiddletownK for a property. liquid damage clause, first is ok, the second is 25% gross receipts, that's a punishment. affirm in part for ∆Liquid damages clauses limited because: can over-estimate, (in NJ must be 'reasonable'), mental shortcomings (bounded rationality, irrational disposition, defective capability), optimism of K.see also: p. 358 compare Pembroke and HymanCh. 6 SPECIFIC PERFORMANCE P. 367hypo:trees to be cut, breach when some cut. can you put in liquid damage clause $600/tree (aka lost revenue)? depends: depends type of breach, foreseeable? reasonable? is damage to punish or reimburse. here, no.hypo:Jiselle and Chrstine's wedding catered.caterers say if breach, $500k.

nail salon says if find better mani, $1000.

Why, if so, are these enforceable? Should they be?

reasonable? purpose? self-imposed punitive? drive out competition?Elizabeth Warren vs. THEL:EW say unreasonably small liquid damages treated the same. Thel says it's an illusory promise.see also: Lee Oldsmobile v. Kaiden (357) and Hutchison v. Tompkins (358)Only if...(expectation) damages are really hard to determine, is a negative injunction (never positive), easy to enforce, and cheap (WALGREEN V. SARA CREEK PROPERTY)not give if can just give damages instead (LONDON BUCKET V. STEWART) because that's compelled labor, expensive and hard to enforce for courtsCH. 7 RELIANCE AND RESTITUTION MEASURESUsually only chosen when expectation is uncertain or too burdensome to predict; reliance is given in donative promises, and should be more accurately called the COST measure.Security Stove v. American RYS Express Co.ch. 6 (367-382)ch. 7 (383-413)p. 383missing one package, could not have anticipated profit, expectation is out. given reliance. pre-promise reliance: hotel, booking, etc. post-promise reliance: express shipping. rule given both pre and post.you can't force T-Swift to play at your 1st communion, but you can forbid her from playing MSG that night.Specific Performance

by Steve Thellike Hadley, no warning given of shipping contents.Albert v. Armstrong: L. Hand decision p 389 RelianceRestitution from BreachOsteen v. Johnsonπ daughter country singer, is ANY ∆ breach worthy of restitution? third argument breach (not sending second record) only substantial. New trial.p. 392US v. Algernon Blairbreach 28% K done, need additional $37K, but b/c expenses >$37K, expectation would be $0. get rest even if restitution > expectation!Kutzin v. Pirnie -- NJ real estatep. 391 Restitution if: unjustly enriched, substantive right, or there can be remedies. cannot reject rest. even if ∆ prove no profit for π, and in some jurisdictions, rest. may exceed KPis ANY breach substantial for restitution? Who decides, judge or jury?p. 409 Restatement, Third §36: Restitution and Unjust Enrichmentp. 395p. 395 Restatement Second §370 #2 vs. #5, restitution given to π only if some benefit received by ∆.rest. given b/c §370 #5hypo: lawyer says, $500 to help doctor's divorce. taking $4K of Lawyer's time. doctor fires, doctor use his work for divorce. does doctor receive expectation or restitution? get restitution b/c §370 #5 applies. expectation is no cap on restitution. ∆ deposit - π damages = recovered amount (substantive restitution)p. 406 Corbin doesn't understand evil.ASSENT: INTRO; OFFER and REVOCATIONCHAPTER 8 &9Subjective v. ObjectiveRestatement First §227Lucy v. Zehmerp. 419$50K for farm. ∆ tipsy, not drunk, thought it was just a joke, coerce wife into signing under that supposition. ∆ think wagering that π doesn't have the money. issue: who bears the risk, ∆'s wife, or π? was it reasonable? never once said joking, mental assent not necessary.$50k for car, but fingers crossed. enforceable? yes.if not, could unfairly extract info, bargaining mechanism might break down, bilateral monopoly facilitates.Raffles v. Wichelhausp. 425rule for π2 PEERLESS, 1 Oct., 2 Dec.from Bombay to Liverpool, during US Civil War, before Lincoln's re-election and right after India Sepoy Rebellion. Likely cotton price would change.Contract void, equally unreasonable mistakes. cannot prove K intent more one way or the other. Principle III.Frigaliment v. BNS Intern. Salesp. 428what is a chicken? 1. narrow industry: broilers only, or 2. broad biological: stew and broilers?no K like Peerless, restitution for π4 Principles of MODERN K Law, Restatement, 2ndp. 441Embry v. HargadineI. If 2 different meanings, no knowledge of other, rule for more reasonable. §201(2)(b). objective.II. Peerless. 2 meanings, equally reasonable, no knowledge of other, void. §20(1). Subjective.III. if same meaning, even if unreasonable, follow that meaning. §201(1) subjective. reverse Williston p. 440IV. two meanings: A knows B attaches meaning Beta, B not know A attaches meaning Alpha. Beta prevails, even if unreasonable. §201(2). subjective12/23 renew or quit? ∆ said "Go ahead, you are all right. Get your men out, and do not let that worry you." side with π. If language of employer can reasonably be interpreted as assent, assent.p. 432p. 435 1st & 3rd ¶Morales v. Sun Contractors, Inc.no promise translator (hired by ∆) read the whole thing to π. Procedural unconscionability? π not sue for fraud. rule: no language exception, duty to learn?p. 436hypo: if silent, sell car for $700? no.

sell $700? yes. wait...no.no take backs!Spaulding v. Morseissue: ∆ pay child support payment while in Army? What is evident purpose of HS $1200/year? college 2200/year? rule: THE ARMY IS MOTHERp. 447rest. 2nd §204Beanstalk v. AM Generalp. 449π license to use ∆ license Hummer, 35% gross π to π.POSNER: π K is Absurd∆ sell Hummer to GM, written by π, K is absurd. π not contribute value. GM need not pay π for service employees did.rule of construction against drafter can help drafter, make things efficient and clear. allows person to know how it will be construed.Lonergan v. ScolnickLawson v. Martin Timber Co.p. 455helps Thel understand2 years to cut trees, 1+ if floods. floods happened, ∆ not finished, "could have finished in 2 anyway."rule for π: objective meaning: if flooding prevents work, then 1+ year.p. 458Land $2500 ad in CA Rest. 2nd §24 and §25. conditional offer: "If no delay..." but a delay. No K"An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it."Donavan v. RRL Corp."Some courts have stated that an advertisement...does not constitute an offer, but rather is presumed to be an invitation to consider, examine, and negotiate.... Nevertheless, certain advertisements have been held to constitute offers where they invite the performance of a specific act without further communication and leave nothing for negotiation."p. 465Lefkowitz v. Greater Minneapolis Surplus Storep. 461463: An offer is an invitation for acceptance. "offer... does not become a contract of sale until accepted by the seller, and until a contract has been so made, the seller may modify or revoke such prices or terms."issue: was the ad an offer? was π conduct constituting an acceptance? accepting it would complete contract. rule: yes! sufficient mutuality for KInvite: ad: car for $1500Offer: buyer: okContract: seller: okfisher v. bell (UK statute) p. 467cannot have "offer of sale" for switchblade. rule instead an "invitation to treat." no K rule for ∆.Akers v. JB Sedberryp. 470offer to resign w/ 90 days pay, bad mgr. says no, sets aside talks. on monday, writes, accepts offer. π sue for breach of underlying K. not timely acceptance."presentee" rule conversation. p. 473 "close of conversation"§40, Ill. 2 (Corbin response): if in-person, and no time said, "at once." if silence, no longer open for K.no...wait...yes. gives unfair information. reliance or information justifies counter. first offer is null.

offer: manifestation of intent. confers power of acceptance.an ad is not a K.2nd §42 on revocationrejection nulls power of acceptance, less likely to say no, encourage and strengthen KDonavan (p. 465): cannot offer a car you don't intend to sell§39 counter-offers, p. 481 Ill. 1-3§68can I wait till monday? send letter "yes," call before delivery "no." enforceable? yes, mailbox rule.Ardente v. Horanp. 476furniture in home included or not?b ----offer $250K-------> Sb <------- attorney ok---- Sb <-------writing----------- Sb -signs/investigates letter-> S<--accepted, or acceptable?qualified acceptance or acceptance w/ questions?asking about furniturerule: letter was counter-offer, terminates Kofferor always has right to retractcounter-offer is reliance of failing to retractπ tried to trick, accept offer and ask for furniture. nothing is acceptance unless clearly acceptance UCC §2-202offer, accept, die ---> K? yesoffer, receipt, accept sent, die, accept received. K? yes b/c K is upon transmission, not receipt;exceptions with items with the estate.mirror image rule p. 483cond'l. accept. terminate power of acceptance, and if diff at all, at all, no K. UCC§2-207, §59Dickinson v. Doddsbuyer wins property, specific performance. court reverse on promise to keep open, not acceptancep. 486No K, was a promise, an offer, but never KUCC 2-205: cannot revoke "hold open" offer so long as consideration; must have extra form.2nd §42, 43, 45Ragosta v. Wilder∆ sell fork shop, π try again two years later. 88K gathering was preparation, not beginning, not in exchange for keeping offer open. π get §90 P. estoppel:1st: def. and sub. damages2nd: anything reliance, reliance onlyacceptance effective upon dispatch. unilateral K: 2nd §45unilateral: no K until performance completed, just an offer until then.preparation v. begin.start performing, can opt outflagpole example:buy climbing shirt, no Kfirst step, K, b/c reliance490Drennan v. Star Paving Co.p. 497π refuse paving to ∆ bid submittedwaiting on lowest sub-, hadn't gotten prime bid yet, then retract. prime is not bound, no reliance. sub is bound b/c reliance.thel thinks this is messed up, encourages price shopping w/o consequence.Owen: if can't get <10K w/o price shop, wouldn't have gotten. OK, first bid had nothing to do w/ secondfather: son, take care of me for 10yrs for house. son: yes. K? yes revoke? no2 years: son, FUson gets performance? or 1/5 of house?§45 K starts at beginning, conditional on completion1484-Eight & Mills v. Joppichdoes §87(1)(a) apply?Offer is binding if: in writing, signed by offeror, recites purpose, and proposes fair exchangebuy back option: if no rebuild in 9 months, can buy back for 90%. $10 consideration. embedded option is in real estate K, like tire is in car Knaked option is a separate thing. was buy back naked or embedded? reverse. enforce buy back option.THE MECHANICS OF BARGAINING AT A DISTANCEMAILBOX RULE:acceptance= dispatchrevoke = receiptunless offeror changes itallows K to start earlier, more efficientCHAPTER 10ch. 8 (417-456)ch. 9 (457-511)ch. 10 (513-518)ch. 9CH. 11: MODES OF ACCEPTANCEKLOCKNER V. GREENOral K, care for step-mom. step-daughter: property, step-son: real property. CONTRACTp. 520Oral K, part performed, should negate statute of frauds. bilateral better for promissor b/c action for breachDE CICCO V. SCHWEIZER"THE SPRINGS OF CONDUCT ARE SUBTLE AND VARIED. ONE WHO MEDDLES WITH THM MUST NOT INSIST UPON TOO NICE A MEASURE OF PROOF THAT THE SPRING WHICH HE RELEASED WAS EFFECTIVE TO THE EXCLUSION OF ALL OTHERS." BENNY MOTHERFUCKING CARDOZOmotive not matter, but must have ability for motive. different from knowledge. Simmons v. US, fishing, no motive, but knowledge, accept offer.engaged: when u marry, I'll give $1 mill.first one, couldn't determine price. second one, first come first serve induced action. otherwise:invite, not offerUCC food rule*FTCR--Retail food store advertising and marketing practicesp. 468 Eisenbergp. 448 supplemental materialamends to say grocery stores must sell at the price advertised.terminate power of acceptance:-time lapse-rejection-counter-offerinterpretation key, when is end of conversation?end of subject, or meeting?p 480 RI Dept. Transmodify to benefit other, still a K.b/c no K, no hold openthel not a huge fan.the option is an appropriate preliminary step in the conclusionsigned writing is K, desirataGlover v. Jewish Warif they helped catch, w/o knowing reward, cannot accept offer, didn't get reward.

cannot accept w/o knowing offer. K is done w/ performance, acceptance is the actBishop V. Eaton∆ repay π if π pay ∆'s brother. π send $, never arrive. ∆ reassure will repay if bro not. π sue. hold for π. in unilateral K, is offeree required to tell offeror? yes, within a reasonable timeframe.527first thing is an invitation to bid because you need executive approval, not an offer. it does not confer the power of acceptanceInt.'l. Filter v. Conroep. 530signed but not executive not notify, sent offer. didn't have to convey acceptance.seller invites "furnish" water softener for $1230. if agree, no K. "accepted" by buyer--offeror. approved by executive officer--K.usually, when marked "approved"--K, or changed by offeror (buyer)--signed by Exec., no KPolaroid v. Rollinsp. 534question: if K where cannot produce written agreement. didn't make promise only way to accept it.acceptance by conductwhen offeree accepts w/o saying Y/N. request promise. not made. promise? no. Court rule a promise is not the SOLE means of acceptance.Subcontractor's Bidgeneral contractor breach, not liable. but if a sub-contractor breaches, they are liable. the general contractor relies on the sub's implied promise.Phillips v. Moorfailure to notify offeree acceptance is too latep. 539who's hay was it when it burned? intent and understanding the property passed to ∆. offer must be accepted within reason. rule π. it was ∆'s hay. also UCC 2-509. burden on buyer. §69 on silence.§70!Silence as AcceptanceVogt v. Madden (p. 542)sharecropping previous years. not agree to 1981.silence => no K. exceptions in §69 not apply. no K, no π damages. use instructions #18§69: Acceptance by Silence or Exercise of Dominion.1. offeree fails to reply, silence is acceptance only:a. benefit incurred w/ reasonable chance to rejectb. offeror gives reason to believe silence is acceptancec. previous understanding

§70: Effect of Receipt by Offeror or late or Defective Acceptance: late or defective acceptance mayb be offer, but silence is acceptance in cases only in §69generally, late acceptance is a legal counteroffer. "reasonable". if not say time matters, silence = yeshypo:drop off $35 microwave, if you don't return you owe $35. offeror cannot CREATE a duty. Silence is not acceptance, but you must say no.39 USC 3009--it's a gift.

KRU receive apples, say "ok", but wrong ones. w/o asking. must say "no"--duty to inform to prevent loss.is silence acceptance? no.but if it's clear, there's a history, and not imposed, gift not obligation, and opportunity to reject.Kukuska p. 551Insurance rule: no K until accepted by offeror. seller makes form to make offeror, unfair. had given in reasonable time, could have gotten other insurance. RELIANCEGanley v. G&W LTD. Pnrshp.p. 547silence induced lower costs. real estate commission. trial 4% commission, then 8%. appeal back to trial ct. agree to 4% w/ silence. silence does not raise estoppel. rule: offeree cannot watch move based on silence and they pay costs from it. Ganley should have clarified costs paid to appellants. DUTY TO SPEAK.duty of implied K under circumstancesELECTRONIC AGENT: WE DON'T REALLY KNOW WHAT'S GONNA HAPPENCH 12: IMPLIED K AND RELATED NON-K CLAIMSCH 12Nursing Care Services v. Dobosp. 560ch. 11 (519-558) and 12 (559-592)hypo: give me a cup of coffee. at store? K. at Victoria's home? no K.Implied-in-fact. like Woods v. Lady Duff: it only makes sense if it's a promise.doctor saves a life: payment is implied-in-law. if on duty, no pay. if not on duty, unsure.$ for nursing, doctor's orders. π care, no K. but no consent needed for emergency. ∆ accepted care when awake---> implied promise. rule π.Vertex v. City of WaterburyY2K Update. was new proposal part of old K, or a new thing?Jury Instructions, rule for ∆, but appeal. implied K => unjust enrichment. appeal: change instructions to implied-in-fact K and unjust enrichment.p. 563squeegee man start cleaning. K? nope.then there's stuff on the history of assumpsit and other archaic terms on p. 566Day v. Catonp. 572Brick Wall between neighbors.π build wall on lot 29, ∆'s is lot 27, vacant. if no promise, no need for ∆ to pay. if you know -> pay. if you don't -> don't. π expects to be paid, think agreement. at some point, ∆ has obligation to say no. silence to + work is assent.CH. 13 INDEFINITENESS, PRELIMINARY NEGOTIATIONS, AND THE DUTY BARGAIN IN GOOD FAITHit either is or it isn'tch. 13 (593-649)Academy Chicago Publishers v. Cheeverp. 594Chicago - K is ok. circuit - yes. Sup. Ct. - notoo many ambiguitiesdelivery date, which stores?expensive, impossible for perfect complete Kburden. The court says it's not a K if you cannot tell performance or breach. p. 597UCC gap fillers. p. 603agree to agree isn't a K.Saliba-Kinglen Corp. v. Allen Engineeringp. 601∆ sub-. bid accepted, tries to get out, just gave a price, no other details.not §90. invoke Drennan, K there, K here.giving just price is common practice, so it's a K.New K must be in good faith.Joseph Martin Deli. v. Schumacherp. 604renewal clause says "the tenant may renew this lease for an add'l. period of five years at annual rentals to be agreed upon;"CoA reverse: no renewal clause.agree to agree not K.the concern is substance, not form (Corbin-y)hypos:what if the landlord knew the renewal clause was unenforceable?what if it said:Agree to be determined? noAgree to talk about renewal? noRight to renew at determined rate? yes?2nd §33 certaintyUCC 2-204 (3) intend K and a remedyUCC 2-305 K if"reasonable" price?nothing saidagree and fail to agreeagree to third priceRight 1st Refusalright to buy at price of third party offeroroften pended to another K, observable not enforceable. way to get people to do things you otherwise wouldn't be able to, like avoid a factory being built next to your farm."subconscious humor is schizophrenia" -Thelgap fillers-reasonably agree-construe againstone party always (drafter, or seller)-industry standard-mailbox rule is good, puts burden to change on person easiest to do so-reduce cost of KBEST IN-CLASS HYPO EVER:Agree to sell Hawaiian shirts to Bergdorf at a "reasonable" time, price, quantity, and method. Is this a K?UCC 2-308, 2-309 date, place. but Quantity is open.can the court ID breach?Hoffman v. Red Owl Storesp. 637promissory estoppel §90sells other store, buys a small one, takes out loans, huge number of looples, sues on reliance. break in negotiations when say father's 13K loan was a gift.price change, sue in reliance on negotiationsno expectation. but π got some damages.+misrepresentation- not §90, limiting to expectationquasi-tortious suit. famous, high point of K theory now discreditedCH. 14: PAROL EVIDENCE RULE: TEXTUALISM V. CONTEXTUALISMWhat is included in a contract?What does integration mean?When does oral vs. written matter?Ch. 14 (651-749)Mitchill v. Lathp. 652Mr. π agree to buy ∆ land, Mrs. π add, will buy if you get rid of icehouse.K to tear down icehouse? nonot meet parol evidence rule:-must have collateral-must not contradict original K-must be beyond what reasonably expect to find in original K (aka not too close)hypos:skis 200? actually,instead, snowmobile 800? yeaskis? nopaint 800? actually, skis 400? yea. paint? yea.written is better, not necessary, privilege integrated writing, it's just there, it's clear.Masterson v. Sinep. 665integration§228, §237, §239, §240Corbin: intent, circumstancesWilliston: form. writing(s) itself only, otherwise parol evidence is too weak. intent < writing

Thel marry 3/1 when promised to marry 6/1Breach of implied promise not to repudiate

interpretation, implicit in all promises are not to repudiate. "prenup is liquidated damages."lost wages 6/1-7/1 are damagesbest to try not to repudiate, wait till breach, in case it's all okay. or be up-front to allow to mitigate, reduce your damages: "I might not make it."Wholesale Gravel v. Deckerp. 1128appeal gravel driveway, no date, think performance 90 days w/ payment, actually two weeks. it's wet. assures thrice, ∆ sues. repudiation through conduct. rule for Decker.Kanavos 1134: chemical and billionaire"ready, willing, and able defense."∆: I didn't repudiate, π wasn't ready, willing and able.UCC-2-713 sell wheat 6/13/1 repudiate, damages?KP-knowledge of repudiation.Often to protect when learn of repudiation afterwards.seller's remedy not have this: split over KP-MPRepudiation or KP-MPDeliveryPittsburgh v. Brookhavenp. 11361mill. water gallon tank. K pay 100% 30 days after performance, buyer lose loan, ask escrow, not get, ask personal assurance, no, perform? no. assurance switch liability, asking for more security. if buyer have unexpected, intervening loss, can demand adequate assurance.Norcon v. Niagara Mohawk Powerp. 1144∆ buy 25 years power, 3 payment periods, 3rd credit or debt is made back, ∆ will owe $610million. couldn't pay. diversity, NYCoA says right to assurances like in 2-609. Won't say how much, not make statute. demand assurances, if not, suspend.2-609: if no assurance in 30 days, that's repudiation, right of action for other party.Badsakis v. Demotsisshipwrecked vessel carrying whale oil was discovered by 3 ships (Ds) and since there was not enough room to take all of the whale oil aboard the ships, P held auction for barrels and bids were extremely low